A term life insurance plan (online term plan) lets you protect the one thing that nobody can live without I,e. their family.
Life insurance may seem like an unnecessary expense when you purchase it. The truth is, term life insurance offers protection from financial crises should you die- and this protection is necessary for anyone who has a family.
When you have a family depending on your income for living expenses, it is essential to maintain your ability to care for them by planning.
No matter how good an employee you are or how much money you have saved up in the bank account- no one can live without the protection.
What is a Term plan?
It is a form of life insurance that provides comprehensive coverage against financial loss because of an untimely demise.
It offers coverage for a specific time period.
Premiums for this insurance are significantly lower than for comparable permanent life insurance., such as whole life policies. Because the policy does not build up any cash value, and the coverage stops at the end of the tenure unless you renew.
Protection plans don’t guarantee a return on your investment. It is a pure insurance policy that provides coverage for a specified period,
Type of Term insurance policies:
Based on maturity, prospective protection plans are of two types:
- Standard term insurance (No return on maturity)
- Return of Premium (return of all premiums, excluding GST on maturity)
Based on mode of purchase, we can divide them into:
- Online term Insurance
- Offline term Insurance
There are also variations to the protection plans basis feature, which we will cover later in this article.
What is an Online Term Plan?
Online term insurance is one that you purchase online without visiting an insurance agent or broker.
They are relatively inexpensive and provide a lump sum benefit to your loved ones in case of death. The investment component is absent in these plans.
An Online term plan lets you avoid high-pressure sales tactics you may encounter from agents when you try to buy a policy.
These sales tactics are bad for you because they will often lead to an additional premium with unnecessary features.
Why buy term plans online?
Having the proper protection plan can secure your future, but buying one has never been easier. With the online platform, you can now buy your plan in less than 5 minutes!
Lower premium benefit:
Premiums are lower than other types of insurance and even offline term insurance because of a lack of intermediaries, like agents in between.
Rider Benefits:
In online term insurance, you also get a different rider option inbuilt with the policy. You can avail additional benefits like coverage for accidental death and critical illness.
Transparent:
If you purchase from agents, they may do miss-selling. They may add unnecessary features in the physical form. They may tamper with your data, health status & income proof to get the policy issued. But in an online approach, you can fill all correct & facts about you which will help claim settlement.
Quick and Secure Buying Process:
In an offline mode, they process a physical application after manual check-ups. It increases the issuance time of the policy. Whereas in an online case, everything is real-time & the processing is faster.
Easy Comparison of Features and Benefits:
No need to depend on the agent to describe the features. You can compare features and benefits yourself & decide.
How to buy term insurance online?
Buying term insurance online is great because you can get the coverage you need in a matter of minutes. You can get a free quote from a reputable insurance company online, and you can start buying your term insurance online.
But before that consider the below-mentioned points.
- How Much Term Insurance Cover Do You Need?
It depends on the financial obligations you have on you. you can decide on the goals you need to accomplish for your life.
Let’s suppose, you are a 30-year-old male with an annual salary of six lacs every year. The Thumb rule says you should take 15 to 20-time cover on your annual income.
But why?
Because you need coverage that can meet the below-mentioned goals:
education of children: 50 lacs
health expenses:20 lacs
marriage of children: 10 lacs minimum
buying a house: 50 lacs minimum
monthly regular expenses: 30000 minimum per month, which translates into 60 lacs in the next twenty years by the time you retire.
If you add the above, it comes to 1.90 crores in the next twenty years. So take a life cover of Rs 1.90 crore.
- Policy term & premium payment options?
With a term insurance, you can take a policy term up to 85 years. But you may not pay the premiums if you don’t plan from now.
Since you will achieve some of your goals by the age of 60, like education & marriage of children, you may not need extensive coverage then.
Keeping these things in view, you must choose a premium payment term.
Buy a Term plan online in just six steps:
- Generate a quote
- Evaluate a Term Insurance Quote
- Maximize Term Insurance Benefits with Riders
- Upload the documents
- Make the payment
- Complete medical examination
Who should get term insurance?
People concerned about their family’s financial protection in case of their sudden death & looking for an income replacement should get term life insurance.
Who can buy it?
To have a term plan, be above eighteen years & below 60 years old
It’s an income protection plan for the entire family, so the policyholder must have valid income proof.
A policyholder should be healthy as per the medical grid for term insurance.
he must not be having a dangerous or hazardous profession
Advantages of term Plan
In Ageas federal life insurance, we have a famous saying we sell hope, not distress. Once you have term insurance, you will be free of worries if you won’t be there; what will happen to your family financially? You can enjoy your life at every moment.
Tax Savings:
Insurance is the only instrument having double tax benefits. With a term plan, you can get tax exemption under section 80 (c) while investing. Besides that, there won’t be any tax deduction on return after maturity under section 10 (10d) of Income tax returns.
Flexibility to choose the benefit amount:
You can choose a sum assured (payouts on death) as per your need if it permits the insurance company’s underwriting guidelines.
Accidental death benefit:
When you die because of an accident, your nominee will get additional death coverage if you have taken out an accidental death cover.
Accidental Disability Support:
Some insurance companies give protection because of permanent disability, like waiver of future premiums during the premium paying term.
Critical illness rider:
Life insurance companies cover their term insurance customer with Terminal Illness. The federal government had a policy called I-Flexi where it provided coverage against cancer, heart disease, and stroke.
Financial Protection from Inflation:
Insurance companies take care of inflation in their payouts. Ageas federal Income Protect Plan gives fixed monthly income to the nominee which increases by 5% simple rate of interest every year.
Safety for Loans and Liabilities:
The death benefit takes care of the loans & liabilities of the policyholder and gives his family financial protection in his absence.
Long Term Security:
Unlike a traditional life insurance policy such as money back plans, a term insurance policy provides insurance coverage of more prolonged periods for very Affordable Premiums
Financial Security During Life Events:
We have different financial goals for various life stage events like marriage, education & asset creation which may go haywards in our unfortunate demise. A term policy can take care of these financial goals.
COVID-19 Death Coverage:
As instructed by IRDA, insurance companies have made special provisions for death claim settlement because of covid-19. In Ageas federal life insurance, Covid-19 claims are settled quickly, say around four days after receiving all relevant documents from the claimant.
FAQ : Online term Plan
Things to consider while buying term Plan
Risks: Your Lifestyle habits can increase your mortality (death) risk factors. In that case, pay extra premiums to take your coverage. Healthy lifestyles reduce the risks of mortality & hence the premium payable as well.
Plan options: check if your plan provides a premium option for a limited period or a single premium. You can choose your Policy period, premium payment frequencies, Risk cover & annual premium.
policy benefits:
Look for additional cover, Survival benefits, maximum coverage, free-look period.
What is life cover, and how does it work?
Life cover is a type of benefit that takes effect in case of your unfortunate death. You can protect your family financially with this plan.
What is critical illness cover?
Critical illness insurance helps pay out a lump sum on diagnosing a specified illness, such as cancer, heart attack, or stroke.
What is a top-up plan in term insurance?
In term insurance, a top-up plan is a type of additional coverage that you can add to your current term life insurance policy to increase the benefits.
What are the simple eligibility conditions for buying term insurance?
To be eligible to buy term insurance, you must first be an Indian citizen and above 18 years. Then you must be healthy and not suffer from any ailments.
The maximum age of the applicant should not be over 60 years.
Only Indian citizens are allowed.
The Customer should be in good health on the date of application.
The applicant should have sufficient income proof (salary slip for a job holder & 3 years ITR plus COI for business owners).
The applicant should be able to submit satisfactory proof of residence, identity & age.
What is the amount of term insurance coverage I should buy?
What would your family need to recover financially if you died? Buy enough life insurance coverage that can replace your income and take care of your heirs.
What effect does age have on Term Insurance Premiums?
The premium of term insurance policy increases with age. It is mainly because the probability of death increases with age. Life expectancy decreases by 1% for each year a person is beyond the age of 30.
What are the other Term Insurance plans?
Offline term plan, return of premium plans, lump-sum plus conversion plans, lump-sum payment plus regular income plans, Limited Premium paying term plans
Difference between Term Plan and Whole Life Plan:
A whole life plan is a permanent policy where the company maintains the policy throughout the policyholder’s lifetime.
A term plan provides insurance coverage for a specified period of time. A beneficiary receives the amount insured if the policyholder dies.
Term life insurance provides coverage for a specified period of time.
Whole life insurance covers your lifetime. Term life plans are cheaper than their whole life counterparts.
But the policy premiums of whole life insurance are costly.
Whole life insurance investors also earn dividends and get some bonuses from their insurance companies.
What is Sum Assured?
Sum Assured is the total amount of cover available to the insured in a policy term.
What is a Premium Paying Term?
When you purchase life insurance, you get into a legal contract with the insurer. To ensure that the insurer fulfills its obligation towards you, keep the policy is active. The only way to keep it active is by paying premiums, which as per the policy norms. So the period for which you are paying the premiums is called a premium paying term. It can be a single premium, regular or limited pay option.
What is the best age to buy term insurance?
As discussed earlier that it is wise to get a term insurance plan as soon as possible.
I have three reasons for you:
1st reason: it will cost you less if you start early. Unlike health insurance policies, Life Insurance premium remains constant throughout the term,
2nd reason: when you are young you are healthy. As you grow up, you suffer from different ailments & lifestyle diseases, which increases your premium amount.
3rd reason: with each passing year, your mortality rate increases, making the life insurance product costly every year.
How long should my term insurance policy last?
Nowadays, insurance companies are providing maximum maturity age for their online plans. It means a Life Assured can take a complete cover till you reach 85 years of age.
But it is no thumb rule. It can be customized to suit your needs.
You can take it till your retirement from your job if you think you need it anymore. You may take reduced protection as well.
If I survive the term of the term insurance policy, will I receive a maturity benefit?
With a pure term plan, you will not get any maturity to benefit. However, suppose you have taken the return of the premium policy. In that case, you will get all the premium paid by you as a lump sum payout at maturity.
Do the premiums change during policy tenure?
If you are paying regular premiums in time, then your premium will never increase. But in case you haven’t paid within the grace period & paying later, your insurer may ask you for a health statement. If they find any ailment in your medical tests, your premiums may increase.
I smoke occasionally. Should I still declare myself a tobacco user?
Yes, declare it while taking the policy. If you haven’t reported and the insurer finds it during claim settlement, it may reject your claim.
What is a Group Term Insurance Plan?
A group term life insurance is a life insurance plan bought by the employer for the benefit of employees.
The policy provides coverage for a specific period.
What is an Increasing Term Insurance Plan?
Your sum insured increases by a particular% giving you additional coverage every year till the plan matures.
For example, in Ageas federal life insurance, MyLife protection plan is an option named coverage booster where your sum assured increases by10% every three years. Of course, the maximum coverage allowed is limited to a maximum of 150% of his original cover. But with no extra premiums or medical tests.
What factors affect Term Insurance Premiums?
The factors that affect term insurance premium are the term of the policy, the policyholder’s health, the amount of coverage, the coverage limit, and the face value of the plan.
What does term insurance not cover?
A life insurance beneficiary will receive a payout only from a life insurance policy if the beneficiary dies & the policy is in force at the time of death.
Life insurance does not cover:
– Accidents, chronic conditions, or intentional self-harm.
– Alcohol and drug addictions
– Cancer and pre-existing conditions
– Cosmetic surgery
– Dental procedures, such as tooth removal
– Dependent care, such as babysitting
– Dietary supplements, vitamins, and herbs
What is the Claim Process in case of death?
In the event of the insured’s death, the insured’s family or beneficiary receives the sum assured.
The claim must be made within the stipulated time period, or else it will be lost.
A beneficiary or an heir must file a death claim. Or a person whom the Court duly allows can make a claim.
The beneficiary must file the claim correctly & Produce the original bond,
He must provide a document for his identity proof.
The claimant must submit the death certificate in case of natural death.
In case of accidental death, you must submit a police FIR copy.
In case of Covid-19 related death, the doctor’s certificate must mention the same.
After the beneficiary submits the form to the insurance company, the insurance company processes the claim.
What is the Claim Settlement Ratio?
Claim Settlement Ratio is a measurement of how many claims the insurer paid out compared to the total number of claims raised.
It is of two types: the Total amount settled and the number of policies settled.
What is the solvency ratio?
Solvency ratio is a measurement of how much money the insurance company has to how much it owes to its policyholders and creditors.
Term insurance plans: What are the advantages and disadvantages?
The Pros and Cons of a term insurance plan are:
Pros:
The annual premium paid for term insurance is much less than that paid for other plans.
Premium paid is for a limited period, i.e., for the insured’s lifetime.
Financial coverage is higher than other types of insurance products.
Cons:
Maximum sum assured is limited, i.e., it cannot increase beyond underwriting guidelines.
You cannot convert to any other plan.
There is no bonus or any other monetary benefits on maturity in these types of life insurance policies. The only money your family receives is on your untimely death.
A medical check-up is compulsory unless the sum assured is very minimal.
Which term plan is best
As per our research, my life protection plan from ageas federal life insurance Ltd is the best online protection plan present in the market.
a few other insurers worth mentioning are
AEGON Life:
Bajaj Allianz Life: Bajaj Allianz Life Smart Protect Goal
HDFC Life Term: HDFC Click to protect
Max Life Insurance: Max Life Online Term Plan Plus
SBI Life:
Kotak Life Insurance: Kotak Critical Illness Plus
IndiaFirst Life
Reliance Nippon Life Digi-Term Insurance Plan
Bharti AXA Life Flexi Term Pro
Top term insurance myths – Know the truth !’
Let us talk about the myths regarding protection plans.
- The first myth is that an online protection plan costs more than whole life insurance.
It is not true; Term insurance is cheaper looking at the huge coverage it provides.
- The second myth is that term insurance coverage is less compared to whole life insurance.
In reality, it has higher coverage than whole life insurance.
- The third myth is that after purchasing term insurance, you should not go for other types of insurance:
Life insurance depends on your life goals. So you can take any other policy depending on your goals.
- The fourth myth is that the protection plan is not for everyone.
It is for every earning member of the family who is concerned about his family’s welfare?
- The fifth myth is that term insurance quotes are the most expensive.
One of the cheapest policies available in the market is the protection plan policy.
- The sixth myth is that term insurance premium is not guaranteed.
You pay the same premium every year throughout the entire Policy term.
- The seventh myth is that you can borrow from your term insurance policy.
Protection plans don’t provide any loan facility. You can’t take a loan against them, unlike traditional policies.
- The eighth myth is that in a term Insurance the money is not tax-deductible.
Premiums & returns in any life insurance policies, including all types of term policies, are tax-deductible.
- The ninth myth is that a term insurance claim is not quickly settled because of its higher sum assured against nominal costs of purchasing it.
An Insurance policy is a legal contract.
The life insurance company can’t back down if the policy is active. And (purchased with everything in place & all renewal premium payments done).
Do you regard term insurance as an investment or an expense?
Term insurance is an investment is an opinion. It is an expense is another opinion.
Both are opinions and not facts.
To answer this question, we need to understand the concept of life insurance and its purpose. Then only one can decide whether it is an investment or an expense.
A protection plan is an expense from a purely monetary point because it has no income benefit attached to it when you are alive.
But think of the mental peace you can have when you realize that you have secured your family financially with this plan option.
You can live a fulfilling life. You won’t be worried anymore about an uncertain feature.
It makes it an investment because the returns are many.
Final take away:
You understand the need for life insurance when the breadwinner of the family dies.
His dependents and family members will receive nothing from the person’s death if no insurance policy has been taken.
The beneficiaries can use the funds to survive independently without depending on other people for support.
Please express your valuable opinion on the need for online protection plan in our lives in the comment section below.
